State Summit on Clean Energy and Energy Efficiency

Transcription

1 Clean Energy, Energy Efficiency and Jobs, Jobs, Jobs.... Bigger opportunities than we imagine, but perhaps harder to develop than we think! John A. Skip Laitner Director of Economic Analysis American Council for an Energy-Efficient Economy (ACEEE) State Summit on Clean Energy and Energy Efficiency NGA Center for Best Practices Overland Park, KS May 7, 2008

2 Your Majesty, my voyage will not only forge a new route to the spices of the East, but it will also increase jobs and fleet productivity it by 3.2 percent.

3 An Overview in the Road Ahead What is energy efficiency? And how big could it become? What is the potential for spurring greater employment opportunities? What might drive the development of efficiency investment market?

4 Working Definition: Energy Efficiency The cost-effective investment in the energy we don t use to produce our nation s goods and services. Examples include: New electronic ballasts and lamps, sensors, building and piping insulation, and heat recovery systems installed to primarily save energy Information and communication technologies (ICT) whose secondary value increases overall energy productivity Combined heat and power (CHP) and recycled energy systems with efficiencies of percent, or more Investments in the more innovative, high value-added industries and services that power structural change, but in ways that also lower the nation s energy-intensity The common denominator in all these examples is productive investment!

5 The Magnitude of Lost Efficiency $253,718,514,435 Since 2002, the estimated cumulative cost to the U.S. economy of not adopting smart energy policies suggested by ACEEE in As of about 3:00 pm this afternoon....

6 A Comparison of State-Generated Taxes to State t Energy Expenditures (2005) KS IA MN MO 5,599 5,751 9,016 9,544 12,018 15,881 17,577 19, ,000 8,000 12,000 16,000 20,000 in millions of current dollars Energy Expenditures State Taxes Sources: U.S. Statistical Abstract, 2008; and Energy Information Administration Information on all 50 states is available and, while varying, the data show a similar trend.

7 The Immediate Success Story: Something to Decidedly Build On A forthcoming ACEEE study on the year 2004, * using data from the DOE Annual Energy Review 2007,the Bureau of Economic Analysis 2008, and many other sources, suggests that t in 2004: Conventional energy-related infrastructure required $100 billion in new investment, but.... Energy-efficient technologies had a market on the order of $300 billion Total employment in the production of energy- efficient technologies was about 1.6 million jobs Energy bill savings in 2004 from prior year gains in energy productivity since 1970 exceed $700 billion *See, ACEEE, The Size of the U.S. Energy Efficiency Market, May 15, 2008

8 Why is Efficiency the First Fuel? No clean energy strategy will work without substantially moderating demand growth Rising demand is straining all conventional energy markets whether fossil fuel or renewable energy resources Bringing new supply on line is increasingly tough whether clean or dirty.... Efficiency buys us cost-effectiveness, and buys us time to deploy clean supply options Efficiency is essential to making carbon solutions both achievable and affordable

9 The Efficiency Contribution* 250 Primary Energy Energy Service Demands But it might have been a $2.2 Trillion Cost Plus ~107 Quads Efficiency Savings Quad ds of Total Energy Supply 1970 Energy Usage a $1.1 Trillion Cost ~36 Quads New Supply *Assuming 1970 Technologies and Market Structure with a Growth in GDP (all values in $2000)

10 Efficiency Investments: Low Risk, High Return Average Annual Return Efficiency Investment Risks and Returns 40% 30% 20% 10% 0% Energy Efficiency Common Stocks Long-term Corp Bonds U.S. T-Bills Small Company Stocks 0% 10% 20% 30% 40% Risk Index (year-to-year volatility) Source: ACEEE estimates adapted from the U.S. EPA and the Vanguard Group

11 Efficiency Potential Remains Large A variety of efficiency i resource studies show an economic potential with a ~25% additional energy savings over the next 20 years or so. Indeed, efficiency resources are renewable as technologies evolve and costs drop. This means shifting innovation and capital from the supply infrastructure to the energy service infrastructure. The energy productivity gains imply significant savings for businesses and consumers while positively impacting carbon emissions and the economy.

12 Efficiency Investments Could Become a Much Bigger Business Even with recent passage of an updated energy bill, ACEEE estimates that annual energy efficiency spending could rise from $300 billion to $700 billion annually by * This would be sufficient to drive energy use by 2030 down to 1997 levels l with an economy that t is still 70% larger than today. But the question: Where will the additional $400 billion come from? And the further question: What will be needed to drive that investment? *See, ACEEE, The Size of the U.S. Energy Efficiency Market, May 15, 2008

13 And the Employment Impacts? For this next part of the discussion the numbers 2 and 7 will be very important! And why is this? Because energy-related related purchases are not at all very labor-intensive. In fact: - Energy-related sectors: 2 jobs per million dollars - All other sectors: 7 jobs per million dollars - So, a cost-effective ti investment t in energy efficiency i in effect, a productive change in the recipe of the economy should lead to a net employment benefit for a given economy* * *This and the examples that follow are real numbers, but caveats do apply....

14 Potential Impacts Had the States Been Just Six Percent Energy-Efficient Effi i in 2005 Net Jobs Gained KS 2, ,605 IA 29 MN 5, MO 5, The equivalent net impact of jobs from an estimated number of small manufacturing plants located in the state Sources: Building on the recommendations found in ACEEE 2001, the IMPLAN data set, 2008; and Energy Information Administration 2008.

15 A Quick Thought Experiment

16 What if the U.S. Economy Were to Increase Its Overall Energy Efficiency by 2030? Drawing from a large number of state and national level studies, let s assume that energy efficiency investments reach the scale suggested earlier that the efficiency market grows from ~$300 billion per year to perhaps ~$700 billion per year; Consistent t with our previous estimate, t let s further assume that t the economy is about 70% bigger than today, but that the productive use of more energy-efficient capital allows us to reduce energy requirements so that we re using no more energy than we might have used in the mid-1990s; and Estimating the 2030 energy bill would be about $260 billion less as a result of these productivity improvements, and recalling: Energy-related related sectors support about 2 jobs for each million dollars of revenue, and that All other sectors provide about 7 jobs, but that Further productivity gains might shift the net 5 to a net 3.5 jobs. Then we might suggest a net gain for the U.S. economy in 2030 on the order of about 910,000 jobs.* *But again, caveats do apply....

17 Energy Efficiency: A Cheaper Resource Cents pe er KWh Levelized Cost of Electricity by Source 29% CF $6 gas Pulverized Coal w/o CCS IGCC w/o CCS Biomass Nuclear Energy Efficiency Carbon price: Dollars per ton

18 What it might take to get there

19 The Maryland Example for Electricity E lectricity De mand (GWh ) 80, ,000 60, ,000 40, ,000 20, ,000 - Conventional Generation Resources....a 29% reduction in conventional resources driven by: ~$3.4 billion in program spending, ~a $9.3 billion efficiency investment, displacing the need for ~$3.9 billion in utility investments, and all of which saves consumers ~$21 billion in avoided energy bills over the period 2008 through 2025 And, oh yes, generates about 12,000 new jobs in 2025 CHP Building Codes RD&D Initiative Appliance Standards d State and Utility Programs Collectively, a 29% reduction Source: "Energy Efficiency: the First Fuel for a Clean Energy Future Resources for Meeting Maryland s Electricity Needs," ACEEE 2008

20 Just a Few of the Many Examples of Untapped Efficiency Markets End-use technologies Windows: ($13 B) low-e>>photochromics>>electrochromics Lighting: incandescent>>fluorescent>>solid state Storage: batteries>>high-performance capacitors Enabling or platform technologies Information and communication technologies (ICT) Electricity grid modernization Building automation/control systems Business models Project development for CHP systems (>$50 B potential) Recycled energy development (> $100 B potential) Performance contracting (~$5 B/yr) Smart grid technologies (>$20 B potential) Utility program delivery (~$2B/yr)

21 The Good News About Energy Efficiency Investments t and Climate Change Policies i It is does not have to be about ratcheting ti down our economy; Rather, it can be all about: using innovation and our technological leadership; investing in more productive technologies (including both existing and new technologies); and developing new ways to make things, and new ways to get where we want to go, where we want to work, and where we want tto play. In spite of the evidence, however, most policy studies appear to assume the former to the detriment of smart energy/climate policy.

22 Some Final Thoughts Yes, energy efficiency costs money, but inefficiency even more so....

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24 The difficulty lies not with the new ideas, but in escaping the old ones.... John Maynard Keynes

25 Contact Information John A. Skip Laitner Director, Economic Analysis American Council for an Energy-Efficient Efficient Economy (ACEEE) 4372 Shooting Star Drive Island Lake, IL (847) For more information and updates visit: